An idea occurred to me over the holiday break re: how I can get myself out of debt. I've opted to take money out of my 401K, once I pay off my bills with that I will increase the amount taken out of my check going toward 401K. I will put an additional $100 a month in my 401K and with my company's matching program my job will also put an extra $100 a month in. So basically my job will be helping me pay myself back for the money I took out to pay my bills. Not only will doing this rid me of the hastle of paying bills every month but I won't be paying their APR rates.
With my bills paid off I will have a decent amount of money to live off of and there will be no temptation to charge on the cards I paid off. My desire to not have to pay a bunch of vendors ever payday far outweighs my potential desire to buy things. And now I am in a good place in my life where I have a decent amount of clothing that I actually like - so no temptation to clothes shop when I don't have the money available. I've got my apartment decordated and to the point where I really have to stop no matter what I want because then it's going to start to look 'over' decorated. So no temptation there - and those are my primary temptations.
There's an old SNL skit where the mother bought this new financial budgeting book that is one page long. All it says is - don't spend money you don't have. Everytime a family member wonders aloud whether to take a loan out for a boat or whatever they refer to the one page book, "don't spend money you don't have". OK, not the most funny skit you ever saw but it's extremely sound financial advice - advice I plan to take.
Most of miy debt was really incurred when I was broke and not necessarily because I couldn't resist the urge to shop. But having my bills all paid off - I won't be broke and thus, I won't need to go into debt and have to pay off credit/store cards again. In a way I feel guilty about withdrawing money from my 401k account but on the other hand I have also made plans to pay myself back. So as long as I stay on the plan of paying myself back it will be all good!
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2 comments:
Sounds like a good plan. I gave up all my credit cards a few years back; I can only spend the money I have. It's worked out pretty well.
I'd avoid directly withdrawing from the 401K because of the tax and penalty you'd have to pay. A better choice is to borrow from the 401K and use the load to pay your credit cards. Another thing I'd do is to put as much money into the 401k each month as the company's willing to match. Look at it this way -- you put $1, the company matches $1, and you can still borrow your own $1 out later to pay your bills; you get the company's money for nothing.
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